U.S. wine sales rise 2 percent in 2015

BILL SWINDELL

THE PRESS DEMOCRAT | January 27, 2016

SACRAMENTO - U.S. wine shipments rose last year to an estimated record high of 383 million cases, an increase of 2 percent, despite fierce competition from importers buoyed by a strong dollar that makes foreign wines a bargain purchase, an industry analyst reported Wednesday.

The increase continued a 20-year growth trend for domestic wine shipments, said Jon Fredrikson, president of Gomberg, Fredrikson & Associates, a Woodside wine consulting firm. The growth, however, masks conflicting trends in the market, where wines priced at $9 a bottle and above are doing well yet cheaper budget wines are losing market share.

Fredrikson described U.S. wine sales as a “tale of two markets, and a widening gap in performance between the two” in his remarks Wednesday to attendees at the Unified Wine and Grape Symposium.

The trend toward more premium wines will benefit the North Coast, where grapes from Napa and Sonoma counties are the most expensive in the state and major wine companies are trying to corner a bigger share of the premium market. In particular, E&J Gallo Winery from Modesto has been especially active in buying up properties in the North Coast, such as J Winery and Vineyards in Healdsburg.

However, Central Valley farmers have suffered as sales of budget wines decline. For example, 20,000 acres of vineyards in California’s interior have been pulled since the 2015 harvest, following 21,000 acres that were removed the previous year, said Nat DiBuduo, president of Allied Grape Growers, a Fresno wine marketing cooperative representing nearly 600 growers across the state.

The presentations came a day after Fred Franzia, chief executive officer at Bronco Wine Co., known for its ubiquitous Two Buck Chuck sold at Trader Joe’s, said during a speech that vintners should instead concentrate on budget wines.

The Unified Wine and Grape Symposium is the largest wine industry trade show in the United States. The three-day convention, which ends Thursday, is expected to draw 14,000 attendees and more than 650 suppliers.

Sales of California wines, which represent 60 percent of the U.S. retail market, increased 2 percent last year. Sales of imported wines, which account for 31 percent of the U.S. retail market, rose 6 percent. Wines from states outside California, which have 9 percent of the domestic market, climbed 5 percent, according to Fredrikson.

The strength of the dollar made imports much more attractive to consumers as bottled imports grew to more than 100 million cases.

“Given the strength of the dollar, I don’t think they are going away,” Fredrikson said. Bulk wine imports, however, dropped as domestic wineries had more wine surplus on hand given the major Golden State harvests from 2012 to 2014.

Italy was the largest importer, especially as Prosecco shipments reached about 5 million cases in 2015, an increase of more than 1 million cases over the last two years. France, New Zealand, Spain and Portugal rounded out the top five importers.

Sparkling wines did well in 2015, reaching a record of 22 million case shipments, up 10 percent over 2014, Fredrikson said.

You can reach Staff Writer Bill Swindell at 521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.